Samsung Electronics Co., is launching a program to sell refurbished, used versions of its high-end smartphones. According to an anonymous source with direct knowledge of the matter, the refurbished program will use handsets returned to the South Korean technology firm as part of its upgrade programs in the US and South Korea. The smartphones would then be sold on to consumers at a much lower price.
There’s no word on how big the discount would be, or which countries the program will be available in.
The smartphone refurbishment program will be finalized by early 2017. This will help the smartphone market generate more revenue from premium devices returned by users looking to upgrade to newer versions.
SAMSUNG TO SELL REFURBISHED SMARTPHONES
The world’s biggest smartphone maker is leveraging on sustainability to resuscitate its mobile profits by restructuring its premium smartphones. Samsung wants to maximize its cost efficiency and keep the operating margins over 10 percent. This is available to users who will sign up for its one-year upgrade programs. It will then re-sell these refurbished smartphones at a discounted price.
It’s unknown yet to what extent the smartphones will be refurbished, or how many refurbished smartphones Samsung is looking to sell. Typically, refurbished smartphones are fitted with a new battery or a casing.
Samsung’s biggest rival on the other side of the planet, Apple Inc., boasts a re-sale value of 69 percent on its devices’ original price after a year from launch. On the other hand, Samsung’s flagship Galaxy sells for 51 percent its original price.
Samsung’s refurbished smartphones could help wholesalers boost their presence in emerging markets like India, where typically high-end devices cost between $500 and $800. Whereas, Apple sells refurbishes iPhone in all markets, however, it does not disclose its sales figures. In India, refurbished iPhones or any such premium device sells for less than $90.
By selling refurbished devices, Samsung is fend off competitions by Chinese smartphone companies. The capital would be put to use for investment or to further marketing expense.
THE REFURBISHED SMARTPHONE MARKET
According to Deloitte, the used smartphone market is worth $17 billion this year. More than 120 million devices were sold or traded to carriers or manufacturers, i.e. 8 percent of the total smartphone sales. While, some analysts believe the market will grow due to fewer technology breakthroughs.
Samsung’s latest smartphones, the Galaxy S7 and Galaxy Note 7 are widely popular. This indicates that the refurbished versions could be just as popular. With Samsung’s refurbished smartphones, it will be boosting its mid-tier sales. After all, in the smartphone market, refurbished devices have just as much appeal to enterprise companies looking for a certain pre-installed software product or feature to give it to their employees.
Samsung’s move may be welcomed with open arms in potential markets like India. In May 2016, the Indian government turned down Apple’s request to sell refurbished iPhones. The reason being, it would increase the pile of electronic waste. This comes, despite Apple’s decision to open a manufacturing facility in India.
According to market research firm, Gartner, compared to Apple’s iOS, Android-based smartphones and tablets continue to gain popularity. This is due to the ubiquity of cheaper Android handsets including Xiaomi, Huawei, and Oppo, which are beginning to slice away Samsung’s market share. While Samsung continues to remain on top with the market share at 23.2 percent, it has recently faced some fierce competition from companies including Oppo and Xiaomi.